Possibly the best thing about Delaware’s annual state of the state speech is giving it. Governor Carney’s third annual speech was no exception and was very likely his favorite so far.
Among other things, the Governor noted 20,000 new jobs in Delaware since his election and investments in everything from education to infrastructure to technology. He declared the state of the state as “strong, and getting stronger” and referred to Delaware as having a “strong economy” as well. While there are some economic statistics that may call some of this into question, rest assured that cash is king in Dover and there is currently plenty of cash to spend.
After a bumpy fiscal first year in office, Governor Carney and the Delaware General Assembly have been the beneficiaries of Delaware taxpayers flooding state coffers. So much so that the past two years have generated enough “excess revenue” that $126 million has been put aside and is on the table and ready to go. Spending has been up every year and Delaware’s capital budget has hit record levels as well. FY2021, which starts on July 1, 2020, will continue this trend as revenue forecasts are up another $200 million.
SOS speeches look back and forward and this was no exception. Specifics were purposely light and lofty and will be put into greater detail when the FY2021 operating and capital budgets are released on January 30. As always, there are significant policy proposals in the speech, and I’ll note just a few of them here.
The Governor has proposed $50 million to build a new school in Wilmington and significantly renovate another one. This proposal, worthy as it may be, comes with a major policy change in that it will be 100% state funded. There will be no “local share” paid by the school district, Christina in this case. Rest assured that other school districts will take note, as will legislators who would be happy to deliver similar projects to districts with significant social and economic challenges, poor education performance and failed referendums. It takes 75% of the General Assembly to approve the capital budget so the line behind Christina will understandably be forming.
There is also a $50 million (which seems to be the figure of choice) “clean water” proposal that will be funded in the capital budget. When combined with federal funds, this is more than a $100 million project, and the responsible oversight and management of this new spending is worth watching. Additionally, when tighter fiscal times return, and they usually do, will other programs be squeezed out or will efforts to instate a “rain tax” or other user fees return? These tax proposals were successfully defeated in recent years.
The Governor also voiced his support to nearly double Delaware’s Renewable Portfolio Standard to 40% by 2035 — think “Green Energy” here. With strong opinions on all sides of this issue, costs are likely to increase that will impact the poor, small business and heavy industrial users the most. This could be a boon for lobbyists who may try to get exceptions or favored treatment for their clients. How much of this is actually generated in Delaware and how to avoid a repeat of the failed promises of Bloom Energy will be worth watching. This proposal is almost certain to pass as it has long been supported by retiring Senator Harris McDowell, who has dominated state energy policy for a generation. We can expect the General Assembly to continue its practice of providing retiring members – from the majority party – with a retirement “gift” of sorts.
Policy initiatives and spending proposals are not limited to the executive branch. With a robust national economy benefiting Delaware’s revenues, the General Assembly will surely have many creative ideas on how to spend money or manage the lives of Delawareans in the coming months. This will put pressure on the Governor’s pledge to “limit spending” and may result in Governor Carney’s third supplementary budget bill, which some will argue doesn’t count toward budget growth.
While the distractions of Washington, DC will continue to grab the headlines, decisions made by our state and local governments do have major impacts on our families and communities. Be for them, be against them, but do be aware of them.